Mortgage Market

Origination of mortgage loans in the primary mortgage market and resale of mortgages in the secondary mortgage market, especially mortgage certificates that are bond-like securities backed by blocks of mortgage loans. Primary origination is conducted by mutual savings banks, savings and loan associations, mortgage bankers, commercial banks, and insurance companies. The same institutions are active in the secondary market with mortgage certificate issues directed to the general public and traditional investment groups such as pension funds. Mortgage loans represent first liens on real estate property which, unlike bonds, require periodic payment (usually monthly) of both principal and interest over the term of the mortgage. The federal government has assumed a major economic role in the mortgage loan market because real estate development is a major sector of the U.S. Economy. The Federal Housing Authority and the Veterans Administration promote primary mortgage originations by guaranteeing home mortgages. The government National Mortgage Association (known as ginnie mae) and the Federal National Mortgage Association (known as fannie mae) promote the secondary mortgage market in government-insured loans. The Federal Home Loan Bank Board regulates savings banks, which are the primary originators of home mortgages, and promotes the secondary market in government-insured mortgages, privately insured mortgages and conventional uninsured mortgages.